The federal health law barred anyone younger than 19 from being denied a 'child-only' plan. Citing costs, many stopped selling such policies. States have stepped in.

Insurers that offer health coverage for children can no longer deny them… (Robert Gauthier/Los Angeles…)

I just applied for an insurance plan for my 10-year-old daughter, but she was denied because she has asthma. I thought the new health reform law required insurance companies to cover kids.

You're mostly correct. As of Sept. 23, 2010, insurance companies that sell "child-only" health plans — as well as individually purchased family plans that cover dependents — cannot deny coverage to anyone under the age of 19 because of a health condition. They also can't exclude care associated with a pre-existing medical condition. "It's federal law," says Mike Odeh, senior health policy associate with Children Now, an Oakland-based children's rights group.

But the federal law is playing out in various ways across the country. Many insurers dropped out of the child-only insurance market when the Patient Protection and Affordable Care Act took effect, making it impossible in some states to purchase an insurance plan for a child not covered under a family policy. (They continue to offer family plans, however, because those markets are too lucrative to ignore.)

Robert Zirkelbach, a spokesman for America's Health Insurance Plans, an industry trade group, says the law creates an incentive for parents to buy insurance only after their kids are sick. That leaves insurers with a sicker — and therefore more costly — group of people to cover.

"Plans said, 'We're not going to be able to [afford to] offer plans to kids at all,'" Zirkelbach says.

According to a survey released last year by the Senate Health, Education, Labor and Pensions Committee, 39 states had at least one insurer leave the child-only market after the health reform law took effect, and 17 states reported having no carriers selling these plans.

Kevin Lucia, a research professor at Georgetown University's Center on Health Insurance Reforms, says a number of states are working to stabilize the child-only insurance market. TheU.S. Department of Health and Human Services has helped by allowing states to take action to fight people's tendency to delay buying insurance until they need it, he says.

For instance, insurers are temporarily allowed to charge higher premiums for children with a medical condition, though that will end in 2014 — assuming the health reform law is not overturned by the Supreme Court first. The federal government also allows insurers, if permissible by state law, to set up open enrollment periods to deter people from waiting to buy coverage until they're sick. Although handled differently across the country, in some states people can avoid a financial penalty by buying a plan during open enrollment; for other states, it's the only time during which a policy is guaranteed.

In some cases, state action has brought insurers back into the child-only insurance market.

In California, for example, insurers that refuse to sell child-only plans are barred from selling individual plans of any type for five years. And kids with a pre-existing medical condition who sign up during open enrollment (which takes place during a child's birthday month) can't be charged more than twice the rate for a healthier child. That means a kid with diabetes will pay no more than double the rate of a child with no health issues.

Because the situation varies widely depending upon where you live, Zirkelbach suggests consumers confirm that they've complied with the rules in their state when they tried to buy insurance. "It could be a case where she tried to buy outside of the open enrollment period," he says, offering one possible explanation for your child being denied coverage.

Check with the department of insurance in your state to learn about regulations in place to enforce the health reform law. You can also enlist help in filing a complaint with the insurer if your rights have been violated. To find contact information for the department of insurance in your state, go to the National Assn. of Insurance Commissioners' website at http://www.naic.org and click on the tab that says "States and Jurisdiction Map."

In addition, the federal law helped establish state-based Consumer Assistance Programs to help people learn about their rights and file complaints, among other actions. To see whether there's a program in your state, visit healthcare.gov, go to the tab labeled "Get Help Using Insurance," select "Managing Your Insurance" and click on "Consumer Help."

Zamosky has been writing about how to access and pay for healthcare for more than 10 years.